Private payer pitfalls
Donald S. Karcher, MD
March 2025—The number of payment and coverage challenges coming from private payers and being experienced by pathologists, our clinical labs, and our patients has exploded in recent years. The CAP has been tracking this increase closely and the problem seems to be getting worse by the month.
Private insurance companies appear to be trying every trick in the book to increase their profits—at the expense of doctors, clinical laboratories, and, most importantly, patients. We have been hearing more and more stories about patients who are unable to have a local pathologist interpret their specimens because insurance companies insist on sending cases to “preferred” labs, often located in another state, with which they have a favorable national contract. Many private payers have also introduced so-called laboratory benefit management programs; these are presented as giving patients the most value for their money, but in reality they serve to divert specimens to pathologists and labs with the lowest pricing. This kind of model delays results, interferes with care coordination, and reduces our ability to provide the best possible services to our patients.
In New Jersey, an insurance company is currently trying to restrict hospital pathologists from signing out any outpatient specimens, instead mandating that they be sent to an outside “preferred” laboratory. Imagine the negative impact on patient care when the pathologists responsible for analyzing frozen sections and/or signing out a hospital resection specimen don’t have access to a patient’s previous outpatient slides. This is another example of disruption of care coordination, potentially delaying final sign-out of the resection specimen and ultimately harming the patient.
The CAP, working with the New Jersey Society of Pathologists (NJSP), has raised concerns with that insurance company and repeatedly requested a change in its policy regarding outpatient specimens. In the meantime, the CAP is working closely with the NJSP to pass state legislation that would require private payers to maintain adequate numbers of hospital-based physicians, including pathologists, in their networks.
The CAP works at the state level on many private payer issues because that’s where private insurance companies are regulated. In California, for example, we are supporting a pathology group that has sued a private insurance company for refusing to pay the professional component of clinical pathology services for California Medicaid patients. The movement among private payers to deny PC of CP payments has been spreading across the country, and the CAP is taking action wherever necessary to protect pathologists and ensure we are paid fairly for the services we provide.
These efforts are led by the CAP’s advocacy office in Washington, DC, where we have a department dedicated to addressing private payer issues. The CAP recently added staff resources to this department, upping our game to keep up with the expanding challenges private payers pose.
Advocacy involving private payers is somewhat restricted because of antitrust laws. Although the CAP cannot get directly involved in negotiating prices or payments for services that are part of private contracts between insurance companies and providers, we otherwise advocate forcefully on all private payer issues to the fullest extent allowable under the law.
The CAP partners with state pathology societies and state medical associations to respond to many of these issues. These state-level organizations are often the canaries in the coal mine, spotting new challenges with private payers before they become nationwide trends. If you haven’t already joined your state’s pathology society, I strongly encourage you to do so. You can become part of the vanguard and help all of us be better prepared to respond to these emerging problems.
To help spread the word about the growing problems with private payers, the CAP recently published a white paper on this topic: “Examining the State of Health Care’s Private Payers and the Adverse Impact of Insurance Interference.” I encourage you to read it (tinyurl.com/yuw36vue) and let others know about it.
I would also ask you to help the CAP collect stories about patients whose care has been compromised because their insurance companies refused to work with local pathologists or local clinical laboratories. The CAP is gathering compelling anecdotes to share with interested reporters who can shine a spotlight on this growing problem. Our hope is that media coverage will help get Congress’ attention, and then we can urge legislators to protect patients by not letting insurance companies get away with their growing list of tricks. If you have a story to share, please send it to stories@cap.org.
Dr. Karcher welcomes communication from CAP members. Write to him at president@cap.org.